Dell is continuing its efforts to cut costs and an Austin,
TX desktop manufacturing plant looks to be the latest victim. As is the case
with many U.S.-based companies these days, Dell will cut jobs and rely even
more on overseas manufacturing "to restore the competitive advantage of
the company’s operating model."

The Austin plant closure is a part of a five-point Dell
growth plan which will focus on global consumer, enterprise, notebooks, small
and medium enterprise and emerging countries. By removing the Austin plant from
its portfolio, Dell hopes to make a sizeable dent in the $3B in savings that it
hopes to realize over the next three years.

"We believe we have a $3 billion opportunity to drive
both productivity and efficiency," said Dell CEO Michael Dell. "We’ve
analyzed the business and opportunity, so we know -- without question -- where
our priorities should be. And as we’ve reignited growth in our business, we’re
taking deliberate steps across the company to improve our competitive
position."

Dell's insistence on reaching thing $3B figure will also
come at the expense of 8,800 jobs. This is in addition to the 3,200 employees
that were removed from the mix during fiscal 2008 -- 900 of which came as a
result of a Canadian
call center closure.

"We expect that these actions, along with the
continuing rigor we’re applying to operating expense control throughout our
operations, will result in an improved, world-class cost structure," added
Dell CFO Don Carty.

Wow. If this is true it's an incredibly sad sad story. We're at the cusp of another depression in this nation and Dell thinks it's a great time to dump another 8,800 poor souls into the unemployment line?

one of dell's problems is its name doesn't have cachet and thus can't command a price premium. it seems only apple has been able to get the mindshare that allows them to set their own pricing regardless of competitive offerings.

If the government took steps to prevent companies from cutting jobs and/or outsourcing (Dell is cutting worldwide, not outsourcing), this would only hurt the economy and workers as businesses would be reluctant to open plants in the U.S. over fear that the government would tie their hands.

Dell doesn't give 2 sh*ts about Apple nor should they--they ARE very worried about HP and Lenovo, however. Both competitors rely almost exclusively on overseas manufacturing. The fact that Dell lost the #1 PC maker position to HP this year is the primary impetus for this decision.

Previously, Dell relied on their direct channel to cut costs and undercut retailers on price. But if look at the PCs for sale at Best Buy today and compare them with Dell's offerings, price is pretty much at parity. Even with a weak dollar, domestic PC manufacturing just isn't competitive anymore (especially with desktops that offer slimmer margins than notebooks.)

I think you're wrong. Consider that Apple had $500m more profit than Dell, Dell is looking at Apple (as well as HP and Lenovo).

Direct channel is now everyone's tool, so Dell needs to look elsewhere. Retail distribution brings them up on par with HP, but they need to look at design (and thus the likes of Apple) to try to outdo HP...

With the falling value of the dollar this doesn't make as much sense as it would have five years ago. Not to mention the increased logistical costs associated with over seas manufacturing. I can understand the need to cut jobs, being over-staffed is worse than being under-staffed, but I just don't think this will pay off how they want.

Being understaffed is not inherently better than being overstaffed. Both cause losses. Understaffed companies either lose sales because supply does not meet demand or stress equipment and personnel to meet demand. A situation where a company is slightly overstaffed is often beneficial; it gives flexible to meet unforeseen events. And it is far easier to lay people off than it is to staff and train.

It's obvious that we're in a very bad recession. Granted, the numbers for last quarter aren't out yet, but every measurement they're based on has been released and they all show up dreadfully negative. Most economists are projecting this to rival the recession of the late 70s, which I doubt many of you can remember.

Austin is going to have it bad with this. Although most of Texas was better insulated from the housing bubble, Austin was not, so they're already hurting. Drop 8,800 unemployed on the town (just about 1% of their permanent population) and it doesn't bode well at all.

There's no doubt a that you'll be seeing a whole lot of blues on Austin City Limits.

``We are in a very sluggish economy that's barely growing at all, but it is not in a deep recession,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``It looks nothing like a free-fall environment.''Stern's View

``It's clear the economy is growing little if at all,'' Fed Bank of Minneapolis President Gary Stern said after a speech at the European Economics and Financial Centre in London on March 27. ``The consensus is that it could improve in the second half. But if headwinds pick up, it could be more subdued than that.''

I lived through the recession of the late 70's, and what is going on has little resemblance to then. In 1979 the misery index – inflation + unemployment stood at 17.07, in 1980 it was 20.76, and in 1981 it was 17.97; the index today stands at 8.83.

There are definitely falling prices. Recently a news story was run on the willingness of big box stores to negotiate prices. I don't think we are that bad off, but certain sectors are freaking out. What worries me is the future of our economy, people have houses with less equity, cars that still chug gas, and debt up to their ears. These are all problematic. Factor in a weak dollar and rising prices for fuel, food, and education. The US economy is at a critical moment where things could easily move towards a recession. Global competition for jobs also makes getting out of a recession difficult.

Wow get rated down because your so called economists and fiance say differently than I do??

Gee the economists I have read articles from say we aren't in a recession yet, and it would have to be a lot worse to hit a depression.

We aren't even close to the double digit inflation, gas lines, unemployment of the Carter Administration. NO WHERE NEAR IT.

I wouldn't be taking too much advice from your Fiance if she is claiming we are heading into a depression, when all our economic indicators are all better than they were in the late 70's during Carters Administration.

Yes I was around then, and I remember the gas lines and people complaining because gas hit 70 cents a gallon. Lets not forget the gas rationing and the heavy duty inflation that kept the economy down. People were just happy to have a job then.

It is sad to see another American company closing down shop in America to run to a foreign country to get cheaper labor, but that isn't a sign of recession it is a sign of greed, that started back during the Clinton administration of the 90's.

If you are going to talk doom and gloom, you should make sure that there is doom and gloom abounding about, and not political rhetoric from any side to get one side in power.

Ah well that must make it true....my imaginary dog says we're not so does that count as much as her vote?

The fact is it has been shown that 90% of what determines what happens is what people are made to believe will happen. If the media makes people believe we are in a recession (as they're happy to do because bad news is good news), we'll likely go into one. If they don't, then we're less likely to. Breeding fear that everything is about to collapse will cause it to because everyone will stop doing things. I'm not saying to go out and take every risk you can, but I don't think people need to stop investing, stop shopping entirely, etc.

One thing that I do think could actually worsen things is the Democrats repealing the tax cuts. One because it means those of us who actually pay taxes will have less to spend. Two because it means we have less to invest. And three because it will also repeal some of the cuts on the capitol gains tax which further discourages investing.

People's votes will determine that though. So if you like getting less of your paycheck (or don't care because hey, you don't pay taxes anyway), vote for Obama, Hillary, and any other Democrat in favor of repealing the tax cuts.

JustTom said everything I'd of said, so no point rehashing that. To JustTom: Democrats, liberals, and other extremists, unfortunately, are not interested in statistics, historical comparisons, or anything else -- unless it serves their purposes. :(

I got on the horn with my life-long Democrat mother earlier today, and mentioned the positive ADP jobs report for March; "I don't want to hear that right-wing propaganda."

quote: The fact is it has been shown that 90% of what determines what happens is what people are made to believe will happen.

I've made noise about this on DT before and was called narrow minded and racist and everything else. Why the hell is it so hard for Ameridcan companies to give America people jobs? They're just greedy as hell, you know Dell is making plenty of money, but they want more and they fluff it up by calling it a business decision. So here goes another 8800 jobs in the name of greed. If you suck so bad at making profit in an ethical manner, why the hell are they letting you run the company.

I think you've "caught hell" because you make statements like this. Here are a few flaws in your statements.

1) Jobs aren't "given" away. It's not a lottary.

2) Greed is a stupid term that implies some moral superiority on your part. If Dell is excercising force or fraud to increase profits, this would be "greedy." If they are using fraud (which this is not), then they are doing something illegal and should be punished. As for force, this is a form of greed restricted to government use.

3) If you consider price as one of the determining factors of a purchase, such as a computer, then you are "greedy" by your definition, and have contributed as much toward laying off workers as the company management.

4) "making profit in an ethical manner" What? Is it ethical for the company to retain a few workers until the company fails and they all lose their jobs? Is it ethical to deny business owners the freedom to make basic business decisions?

5) The logical conclusion to your assinine assertions is some sort of communist or fascist regime where control over private industry is centralized. Why not visit Cuba... I hear you can use a computer now. You just can't afford to buy one because of too much "job security." Isn't government control grand?